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Posts Tagged ‘Massey mine’

A while back I wrote about Toyota and the question of whether the free-market may have failed in regulating itself by the presence of the safety failures that occurred in their cars and trucks.  And now we are facing back-to-back tragedies with the mine explosion in Virginia, and now the BP oil-drilling rig explosion in the gulf.  Both companies had numerous fines and citations to their record (but, ironically BP was up for two government safety awards meant to be held this month).  So what is the deal here?  Has regulation failed?  Capitalism?  Does it all boil down to greedy CEO’s?

I would say a little bit of it all… plus other intangibles.

Did regulation fail?  I’m thinking, yes.  How exactly is it that a company receives 500 citations and fines a year and is continuing operations?  Look at the mine example:

Among the hazards are infractions related to air quality; development of a mine ventilation plan; equipment testing; and accumulation of combustible materials, such as coal dust, according to U.S. Mine Safety and Health Administration records.

As production at the mine has increased, so, too, have the violations.

In 2008, the mine produced 363,923 tons of coal and received 197 citations. Last year, it produced 1.2 million tons of coal and racked up 515 violations, the highest amount of violations in the past decade. The proposed fines for those violations amount to nearly $900,000.

I understand that companies are able to appeal certain decisions, and continue operating while working on citations.  But perhaps there should be a limit to that – say your first 20 violations?  I’m not completely versed in this world, so perhaps these are tickey-tack violations that should not disrupt the flow of operations… but they sound pretty big to me.  I’m curious if there is a combination between owners bent on profit, regulators enjoying revenue from fines opposed to work-stoppages, and some serious connections to lobbying efforts in DC to keep things running smooth.

BP meanwhile is an interesting study.  The CEO of BP had apparently done great work in the name of increasing their safety record and costs.  And the oil rig belonged to a contractor, not BP, though the British giant certainly is the overall boss here.  But this case includes not only loss of life, but an extreme environmental catastrophe with a deep-water gusher spewing out thousands of barrels of oil a day into the gulf – with no convenient way to stop it.  So, again… who or what deserves the blame?  Again, I will have to say I don’t know.  But I’m inclined to think it is dysfunction between government and business.

It’s not business completely, because there are lots of companies out there that have sterling reputations for safety and low accidents – so why should these bad examples eliminate the good ones’ self-regulating behavior?  It’s not government completely… they are finding the issues many times.  As I was talking to my brother this weekend I was discussing how libertarian’s are not anti-regulation, or law.  That’s anarchy – rule of law is entirely necessary even in a limited-government view.  My problem with regulation is more typically reserved for personal liberties (such as the ability to smoke, or ride a motorcycle without a helmet) that over time serve to create a nanny-state that creates even greater dependence on government and absolution on personal accountability.  The ability of a government to safeguard our coastline from anybody drilling willy-nilly is not something I oppose.

I think the overall failure could in the area of follow-through.  If your punishment for an infraction is a fine not a fix, then expect people to often just pay the fine.  If your punishment is an order to fix something within a year… expect it to take a year.  I don’t think we need new regulations per se, just better and stricter enforcement of the ones we have – a similar argument to that of our immigration laws.  Bernie Madoff was flagged for his investment scheme – but without follow up.  Massey Mines was flagged but allowed to continue operations.  Deepwater Horizons (the leased rig at the center of BP’s problem) had a history of issues… but was not considered above average by any means, and hadn’t had a reported issue since 2005.  I would say that is pretty successful, but when dealing with oil and environment perhaps even one issue can be one too many.

This is a more fully nuanced discussion than we can have here… but the fact remains, these are tragic events and we should rue them happening.  Where the problem and solutions lie I think is not entirely in one camp, but a failure of many… as is the case quite often.    But be sure, that despite where the fault completely lies… the financial cost of all this will be borne by Massey and BP, not by the United States government or any regulating body.  Which in my mind causes me to think the companies needed to do better to stave off these accidents, and that their share of the fault is higher than any other entity I could drum up.

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